WORLD TRADE  
ORGANIZATION  WT/REG248/M/1 
22 March 2010 
 (10-1545) 
Committee on Regional Trade Agreements 
Fifty-sixth Session  
 
 
 
CONSIDERATION OF THE FREE TRADE AGREEMENT BETWEEN UKRAINE AND 
THE FORMER YUGOSLAV REPUBLIC OF MACEDONIA, GOODS  
 
Note on the Meeting of 15-16 March 2010  
 
Chairman:  Mr. D. Brauns (Germany) 
 
 
1. The meeting was convened in document WTO/AIR/3502/Rev.1, dated 1 March 2010. 
2. Under Agenda Item C.III of its 56th Session, the Committee on Regional Trade Agreements 
(hereinafter CRTA or the Committee) considered  the Free Trade Agreement between Ukraine and 
The Former Yugoslav Republic of Macedonia (FYROM), goods, (hereinafter the FTA).  
3. The Chairman  noted that the Agreement had entered into force on 5 July 2001 and had been 
notified by the Parties to the WTO on 18 August 2008 under Article XXIV:7(a) of the GATT 1994 
and the Understanding on the Interpretation of Article XXIV of GATT 1994 as an Agreement 
establishing a free trade area (document WT/REG248/N/1).  The text of the Agreement, together with 
its Annexes, was available on th e WTO Regional Trade Agreements Information System website.  
4. The Factual Presentation on the goods aspect s (document WT/REG248/1 dated 19 August 
2009) had been prepared by the Secretariat on its  own responsibility in full consultation with the 
Parties, in accordance with paragraph 7(b) of th e Transparency Mechanism (TM) for Regional Trade 
Agreements (document WT/L/671).  Copies of the wr itten questions and replies of the Agreement had 
been made available in the room as the figures in the Annex of the document needed to be verified 
with the Parties.  Once this had been done, th e document would be issued as WT/REG248/2/Rev.3.  
He proposed to organize the consideration of the Ag reement by first asking the Parties and then other 
Members for general comments.  The Committee woul d then turn to the specifics of the Agreement 
using the Factual Presentation to guide the debate .  He proposed that the Committee go through the 
Factual Presentation section by section, and then look at the questions and replies document.  
5. The representative of Ukraine  stated that the Free Trade Agreement between Ukraine and the 
Former Yugoslav Republic of Macedonia, date d 18 January 2001, had been ratified by the 
"Verhovna Rada" of Ukraine on 5 July 2001.  The FTA  covered both agricultural and non-agricultural 
goods and provided, upon its entry into force, for th e liberalization of import duties on the majority of 
non-agricultural goods.  For certain goods, tariff rates ha d been reduced by Ukraine to zero already in 
2004 and 2005.  As for agricultural products, the Pa rties had provided for mutual concessions in the 
form of tariff rate quotas (TRQs) with zero rates fo r certain lists of goods.  However, the use of these 
quotas had been quite insignificant.  In general, the potential foreseen in the provisions of the Agreement had not been fully used.  Trade between  the two countries was characterized as traditional 
from the point of view of nomenclature of goods, a nd no substantial increase in the amount of trade 
had been observed.  The main Ukrainian export to  FYROM continued to be  ferrous metals, which 
according to the latest data of 2009, exceeded 70% of total exports to FYROM.  The main import 
from FYROM until 2007 had been tobacco, which acc ounted for 77% of total imports.  New groups WT/REG248/M/1 
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  of commodities had appeared as from 2007, such as fe rrous metals, boilers, machines, apparatus, and 
electric machines.  The provisions of the Agreement also covered issues of competition, protection of 
intellectual property rights and government procuremen t.  The Agreement also provided the basis for 
the Parties for further improvement of bilateral trade.   At present, the Parties were working at further 
liberalization of trade in agricultural goods.  Sh e was grateful to Members who had submitted their 
questions on the FTA and thanked the WTO Secretaria t for its preparation of the Factual Presentation 
at a high professional level.  Her delegation would provide answers to  all questions and was ready to 
provide further clarifications if required. 
6. The representative of FYROM
 noted that it was a great opportunity to present important 
aspects of the Agreement to the Committee.  FY ROM fully supported the multilateral trading system, 
including the disciplines and mechanisms on RTAs.  She thanked the WTO Secretariat for its efforts 
in the preparation of the Factual Presentation which provided a comprehensive overview of the 
Agreement.  She also thanked Members for the qu estions on the Agreement and for their presence at 
the meeting.   The Agreement between FYROM and Ukraine had been signed in Skopje on 18 
January 2001 and had entered into force on 5 July 2001, at a time when both countries were not yet 
Members of the WTO.  Its objectives were to e nhance the economic cooperation of the countries, 
contribute to the removal of barriers to trade and to create conditions for the further promotion of 
investments, particularly for the development of jo int investment in the Parties.  The Agreement was 
aimed at establishing a free-trade area over a transitional period lasting a maximum of ten years from the date of entry into force.  Pursuant to the Agreement, FYROM and Ukraine had exchanged 
substantial concessions on non-agricultu ral products and full liberalizati on was to be concluded within 
a maximum period of ten years, without exclusion of any particular sector of industry.   The 
transitional period had ended in 20 09 and by the beginning of 2010 all trade in industrial goods had 
been liberalized.  The latest volume of trade had sh own an increase in bilateral trade;  total imports 
into FYROM from Ukraine had risen from US$102.94 million in 2007 to US$202.45 million in 2008, 
a 97% increase.  In 2008, Ukraine was the eleventh  largest trading partner of FYROM on the import 
side, accounting for 2.99% of FYROM's total import s.  Non-agricultural products accounted for the 
majority of imports into FYROM from Ukraine.  Exports from FYROM to Ukraine had also experienced a significant growth in the last th ree years, passing from US$2.09 million in 2007 to 
US$2.95 million in 2008.  In 2009, total exports am ounted to US$10.1 million, more than three times 
those in 2008, with a growth rate of 242%.  Due to the sensitivity of the agricultural sector, under 
Protocol B of Annex I and II of the Agreement, pr eferential concessions on agricultural products had 
been granted through TRQs.  The Parties would, however, examine the possibility of granting each 
other further concessions on agricultural products with in the Joint Committee, taking into account the 
developments in bilateral agricultural trade.  In th is regard, she indicated that at the Second Session of 
the Joint Committee in October 2009 the Parties ha d adopted a decision to grant free access to 
agricultural products that were subject to TRQs unde r the Agreement.  The decision had been adopted 
by the Government of FYROM and was in the process of ratification.  Furthe r liberalization would be 
discussed at the next meeting of the Joint Committ ee of the FTA, which was scheduled in the second 
half of 2010.  She believed that the Agreement provided opportunities for the expansion of trade 
between the countries and reinforced cooperati on thus improving the business environment and 
thereby supporting multilateral trade liberalization. 
7. The representative of the United States
 wanted to share with the Committee some facts 
regarding tariff elimination under the Agreement and asked whether any of these facts had been 
superseded by recent events.  According to para graphs 19 and 24, pages 7 and 10, and Tables AI.1 
and 2 of Annex I of the Factual Presentation, Uk raine had eliminated duties on 85.8% of all tariff 
lines, covering only 34.3% of imports from FYRO M under the Agreement.  Although 97.1% of non-
agricultural tariffs were duty-free, only 18.8% of  agricultural tariff lines were duty-free under the 
Agreement.  In comparison, FYROM had eliminated  duties on 77% of all tariff lines, covering 90.9% 
of imports from Ukraine under the Agreement;  alt hough 95.5% of non-agricultural tariff lines were 
duty-free under the Agreement, only 4.9% of agri cultural tariff lines were  duty free.  She was  WT/REG248/M/1 
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  surprised by the lack of liberalization under the Agre ement, particularly in the Parties' agricultural 
sectors, and especially in light of the impressive FTA s from Ukraine that had been considered by the 
Committee last autumn.  Since it a ppeared that Ukraine had only el iminated duties on 18.8% of its 
agricultural tariffs under the Agreement, and FYRO M only 4.9%, she would like to hear more from 
the Parties as to how the Agreement would meet  the GATT Article XXIV requirement to eliminate 
duties on "substantially all the trade".  She would also appreciate an explanation from the Parties on 
why the liberalization between agricultural and non -agricultural goods was so lop-sides.  She also 
observed that Ukraine and FYROM had acceded to  the WTO in 2008 and 2003, respectively;  
however, the use of pre-accession 2001 applied tariff rates and outdated trade data from 1998 to 2000 
in the Factual Presentation had not allowed Members to see the real story of the FTA.  She understood 
that the Parties had tried to provide add itional information at the Committee but the 
Factual Presentation did not acknowledge the significantly lower rates applied by the Parties as a result of their WTO accession commitments.  She thus suggested, in light of any information provided by the Parties, to add a footnote to the Factual Pr esentation to acknowledge this change.  She further 
noted that, in accordance with paragraph 10 of th e Factual Presentation, Ukraine had notified the 
Agreement after its accession to the WTO in 2008, and wondered why FYROM did not notify the 
Agreement at the time of its accession to the WTO in 2003.   
8. The representative of Ukraine
 replied that, with respect to the further liberalization of the 
agricultural sector, the Parties had agreed on the co nclusion of a bilateral protocol which foresaw the 
liberalization of all duties on agricultural products .  With respect to trade data, she noted that 
paragraph 16 of the Factual Presentation made clear that "should a Party apply, after entry into force 
of the Agreement, a tariff reduction on an erga omnes  basis, that reduced rate shall replace the basic 
duty".  The same concept was expressed in Article 3 of the Agreement.  Moreover, footnote 9 of the 
Factual Presentation stated that FYROM's basic duty had been replaced by the reduced MFN duty following its accession to the WTO in 2003, and the same  applied to Ukraine, since its base rate had 
been replaced by the MFN reduced rate as a result of its accession to the WTO.  She further stated that 
since the schedule of liberalization for non-agricultu ral products had been completed by Ukraine in 
2004 and 2005, the base rate used for tariff reduction – i.e. 2001- was irrelevant, whereas the applied 
rate was the reduced one, in accordance with Ukra ine's accession commitments.  She agreed with the 
United States' suggestion to reflect in the Factual Presentation the lower tariffs applied currently by 
the Parties as a result of their accession to the WTO.  She clarified that the use of 2001 applied tariffs 
in the Factual Presentation was specifically require d under the Agreement.  In preparation for the 
Factual Presentation, the Parties had submitted the lat est available trade data;  as for Ukraine, import 
statistics for 2007 and 2008 had been  submitted, and more recent data had been used in Chapter I of 
the Factual Presentation.  On the different leve l of liberalization between agricultural and non-
agricultural goods, she reiterated that for both countri es the agricultural sector was very sensitive and 
the Parties had been careful with mutual concessions in this sector.   
9. The representative of FYROM
 clarified that liberalization in the agricultural sector under the 
Agreement reflected the outcome of negotiations betw een the Parties.  The volume of bilateral trade 
in agricultural products over the period of implem entation of the Agreement had not been as large as 
expected.  However, it was evident that the TRQs allocated by FYROM in the course of the current 
year had not been used.  Since 2003, TRQs had been  allocated to suppliers on a "first come, first 
served" basis, but interest was still low.  She further reported that total imports from Ukraine had 
amounted to US$2.45 million in 2008, 98.9% of whic h were industrial goods.  As a consequence, the 
liberalization of 98.9% of imports of non-agricultu ral products proved that trade between the Parties 
had been "substantially" liberalized, meeting the re quirements of Article XXIV of the GATT.  With 
respect to the issue of notification, she info rmed the Committee that FYROM had notified the 
Agreement with Ukraine during its accession process to  the WTO, as was stated in its protocol of 
accession but, since then, FYROM had focussed on the implementation of its accession commitments.   WT/REG248/M/1 
Page 4  
 
  10.  The representative of the European Union (EU)
 raised two comments on the FTA between 
Ukraine and FYROM.  Firstly, she noted that, since the Agreement had entered into force in 2001, it 
was desirable to have more information on the current application of the Agreement and on the 
percentage of tariff lines liberalized at present and th e corresponding percentage of bilateral trade.  
Secondly, she observed that, as indicated in the Factual Presentation, no liberalization had occurred 
with respect to agricultural products  and the vast majority of tariff lin es that retained a duty at the end 
of the transitional period also fell in HS Secti ons I-IV.  The corresponding imports liberalized by 
Ukraine were also very low.  She thus encouraged  the Parties to make further commitments in those 
sectors not yet liberalized, in order to benefit from wider trading opportunities in all sectors.  She finally asked the Parties to confirm whether they envisaged a revision of the Agreement in order to 
pursue liberalization of trade in agricultural products.  
11. The representative of FYROM
 repeated that the Parties had agreed to examine the possibility 
of granting further concessions on agricultural prod ucts within the Joint Committee, by taking into 
account developments in bilateral agricultural trade;  further liberalization would be the subject of the 
next session of the Joint Committee in the second half of 2010.   
12. The representative of Ukraine  confirmed that the Parties were working on further 
liberalization of trade in agricultural products.  In particular, the bilateral pr otocol on the abolishment 
of TRQs had been signed by the Parties, and a zero tariff rate was applied to  goods that were subject 
to quotas.  The protocol was under consideration by the Government of Ukraine and had been already 
submitted to the Parliament of FYROM for consider ation.  She reported that, according to statistics 
for 2008, the share of tobacco products (HS Ch apter 24) in imports from FYROM was 51%, while 
vegetables and beets (HS Chapter 7) accounted for 4.4%, and fruits (HS Chapter 8) for 5.5%.  She 
thus observed that the elimination of TRQs fo r these tariff lines would have positive effects on 
bilateral trade in agriculture.  With respect to th e current percentage of liberalized tariff lines and 
trade, she said that 84.54% of total lines had been liberalized:  97.32% of non-agricultural products 
and 9.32% of agricultural products.  If the abolishm ent of TRQs and the WTO commitments were to 
be taken into account, these figures would then corr espond to 91.45% of tariff lines in the industrial 
sector and 56.9% of tariff lines in the agricultural sect or.  No data were available on the percentage on 
bilateral trade;   these would possibly be submitted in writing at a later stage.   
13. The representative of the United States  asked whether the bilateral protocol on abolishment of 
TRQs would apply to all agricultural tariff lines, meaning that these would go to zero without tariff 
quotas, or whether there was less liberalizati on than that.  The representative of Ukraine  replied that 
liberalization concerned only those goods that were subject to TRQs. 
14. The representative of the United States  pointed out that in the Questions and Replies (Q&R) 
document the answer provided to question No. 3 from Chinese Taipei read as follows: "the 
establishment of the free-trade area did not give th e expected results as average rates of growth of 
bilateral commodity turnover with FYROM in 2000- 2008 were lower than the rates of growth of 
turnover with other commodities".  She wondered wh ether the delegation of Ukraine could explain 
why this might be the case and the extent to whic h deeper tariff liberalization in agricultural goods 
could improve that situation.  She also asked  whether the Agreement was meant to eliminate 
substantially all duties and quotas, as required by  Article XXIV of GATT, with respect to all 
agricultural products.  The representative of Ukraine  explained that trade between the Parties was not 
very diversified, since it was mainly limited to the traditional nomenclature of goods.  In her view, 
this explained the weak growth in bilateral tr ade and why the Agreement had not reached its full 
potential.  With respect to agricultu ral trade, she repeated that the Parties had held consultations on 
further liberalization and had decided to eliminate TRQs and apply a zero tariff rate to those goods.  
The representative of the United States  congratulated the Parties for such liberalization.  The 
representative of Ukraine  clarified once again that the Parti es were working, at present, on the 
elimination of tariffs on products unde r TRQs.  She added that Ukraine had liberalized 97.3% of tariff  WT/REG248/M/1 
 Page 5 
 
 
  lines in the industrial sector and hoped that the ab olishment of TRQs would help to improve the 
situation in the agricultural sector.  Finally, she ob served that the Agreement had been concluded long 
before the Parties had become WTO members a nd were bound by GATT Article XXIV norms.  With 
respect to question No.3 in the Q& R document, she clarified that th e reasons for lower average rates 
of growth of bilateral turnover could be: similar import and export structure for both countries, in 
particular minerals and base metals;  not very divers ified bilateral imports and the prevalence of single 
product categories;  the weak knowledge of their resp ective markets;  several stages of transformation 
and periods of destabilization for both economies;  a nd, finally, the weak activity of business entities.  
However, in her view, there was potential for grow th of trade in agriculture and she hoped that the 
elimination of TRQs would facilitate this. 
15. The Chairman  supported the proposal made by the representative of the United States to 
introduce a footnote in the Factual Presentation to re flect the changes that ha d occurred in the tariff 
structures of the Parties.  This proposal was comple tely in line with the requirement on notification of 
changes under the TM.  The Secretariat would then c ontact the Parties in order to obtain the necessary 
data. 
16. The Chairman  noted that the consideration of the goods aspects of the Free Trade Agreement 
between Ukraine and the Former Yugoslav Repub lic of Macedonia had allowed the Committee to 
clarify a number of questions and oral discussion of  the Agreement could be concluded in accordance 
with paragraph 11 of the TM.  If any delegations wish ed to ask follow-up questions they were invited 
to forward submissions in writing  to the Secretariat by 22 March 2010 and the Parties were asked to submit replies  in writing by no later than 5 April 2010.  In accordance with paragraph 13 of the 
TM all written submissions, as well as the minutes of the meeting would be circulated promptly, in all 
WTO official languages, and would be made available on the WTO website.   
17. The Committee took note
 of the comments made. 
__________